The Q3 FY26 earnings season reaffirmed the resilience of India’s private sector banks, with HDFC Bank and ICICI Bank once again in the spotlight. While both banks reported stable asset quality and healthy business growth, differences in provisioning trends and profitability shaped market sentiment. For investors tracking banking sector stocks, these results provide useful cues on margins, risk management, and near-term growth visibility.
This blog breaks down the Q3 FY26 performance of HDFC Bank and ICICI Bank, explains what drove their numbers, and assesses the broader impact on Indian equity markets.
HDFC Bank reported a strong and balanced performance in Q3 FY26, underlining its consistent execution despite sector-wide margin pressures.
Net interest income rose 6.3 percent year on year to Rs 32,615 crore, supported by steady loan growth and disciplined pricing. Operating profit increased 8 percent year on year to Rs 27,098 crore, reflecting efficient cost management.
Net profit grew 11.5 percent year on year to Rs 18,654 crore, aided by a sharp decline in provisions. Provisions fell 18 percent quarter on quarter to Rs 2,838 crore, signalling stable credit costs.
Core net interest margin stood at 3.35 percent. While margins remain lower than historical peaks, they have stabilised, indicating that the impact of higher funding costs may be largely priced in.
The bank also flagged an incremental impact of around Rs 800 crore due to the implementation of new labour codes, a factor investors will watch closely in coming quarters.
Asset quality remained steady. Gross NPA was flat at 1.24 percent quarter on quarter, while net NPA also stayed unchanged at 0.42 percent. This stability reinforces HDFC Bank’s reputation for conservative underwriting and robust risk controls.
ICICI Bank delivered healthy business growth but fell short of profit expectations due to higher provisioning.
Net interest income increased 7.7 percent year on year to Rs 21,932 crore, while net interest margin remained flat at 4.30 percent. Operating profit rose 3 percent year on year to Rs 17,356 crore.
However, net profit declined 4 percent year on year to Rs 11,318 crore, primarily because provisions jumped sharply to Rs 2,556 crore from Rs 914 crore in the previous quarter.
Despite higher provisions, asset quality improved marginally. Gross NPA declined to 1.53 percent from 1.58 percent quarter on quarter, and net NPA improved to 0.37 percent from 0.39 percent. This suggests the provisioning was largely precautionary rather than driven by fresh stress.
ICICI Bank continued to gain market share. Total advances rose 11.5 percent year on year to Rs 14.66 lakh crore, while deposits grew 9.2 percent year on year to Rs 16.59 lakh crore. This healthy balance sheet expansion supports long-term growth prospects.
From an investor’s lens, Q3 FY26 highlighted contrasting narratives. HDFC Bank stood out for profit consistency and lower credit costs, making it attractive for stability-focused portfolios. ICICI Bank, on the other hand, showcased stronger margins and loan growth but accepted higher provisions to strengthen its balance sheet.
A simple way to view this is like two businesses facing the same economic climate. One chooses steady expansion with tight risk control, while the other accelerates growth but builds extra buffers. Both approaches have merit depending on an investor’s risk appetite.
The banking sector remains a key driver of Indian equity indices. HDFC Bank’s results supported sentiment around large-cap private banks, reinforcing their role as defensive compounders during uncertain macro conditions.
ICICI Bank’s profit miss led to short-term caution, but long-term investors may view higher provisions as a positive step toward sustainable growth. Overall, the results underline that stock selection within the banking sector is becoming more important than broad sector exposure.
From a regulatory perspective, stable asset quality aligns well with the Reserve Bank of India’s emphasis on prudent lending and adequate capital buffers.
Key monitorables for the coming quarters include trends in deposit costs, loan growth momentum, and the impact of regulatory changes such as labour codes on operating expenses. Investors should also track how banks balance growth with provisioning in a gradually normalising interest rate environment.
How did HDFC Bank perform in Q3 FY26?
HDFC Bank reported double-digit profit growth driven by lower provisions and stable asset quality, with margins holding steady.
Why did ICICI Bank miss profit estimates?
The miss was largely due to elevated provisions, even though loan growth and asset quality remained healthy.
Are asset quality concerns rising in private banks?
No major concerns are visible. Both banks reported stable or improving NPAs, indicating controlled credit risk.
What is the market outlook for banking stocks after Q3 FY26 results?
The outlook remains selective. Banks with stable margins and disciplined risk management are likely to be preferred by investors.
The Q3 FY26 results of HDFC Bank and ICICI Bank highlight the underlying strength of India’s private banking sector, even as margin pressures and regulatory costs persist. For investors, the key takeaway is to focus on fundamentals, asset quality, and long-term execution rather than short-term earnings volatility.
For those looking to navigate banking stocks with confidence, Swastika Investmart offers SEBI-registered expertise, in-depth research tools, and strong investor support to help make informed decisions.
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The Reserve Bank of India’s (RBI) monetary policy left the repo rate unchanged at 4% in its monetary policy committee while maintaining an accommodative stance, RBI governor Shaktikanta Das announced-on Friday. The governor further decided to maintain the repo rate amid a sticky rate of inflation. The reverse repo rate also remained unchanged at 3.35%.
The repo rate has remained at 4% since August 2020 during the MPC meeting. RBI governor Mr Shaktikanta Das announced-on Friday that the decision was taken unanimously in favor of him. The MPC meeting was conducted between 3 to 5 Feb where the panel was headed by Mr Shaktikanta Das along with the other members Dr Ashima Goyal, Dr Shashank Bhide, Prof. Jayant R. Verma, Dr Michael Debabrata Patra and Dr Mridul K. Saggar.
The repo rate has remained unchanged while maintaining an accommodative stance for this FY to next FY as long as necessary, RBI governor Shaktikanta Das announced-on Friday.
In late March 2020, the central bank had slashed the repo rate by 115 basis points to support growth. This is the 4 time in a row that the MPC decided to keep the policy rate unchanged as the RBI had revised its policy rate on May 22 to increase the demand by minimizing the interest rate to a historic low.
This is the first MPC meeting after the arrival of Union Budget 2021-2022.
An accommodative stance means there is room for reducing the interest rates in the future to revive economic growth. That’s why MPC has decided to continue with the stance from the current FY 2021 to next FY 2022 to revive growth to minimize the impact of COVID 19 on the economy.
Even if the central government and central bank worked together to uplift the economy by providing financial support, the economy still has to take a long time from the Covid 19 impact with rising cases.
Therefore, RBI decided to minimize the interest rate and await inflationary pressure to ease before the economy grows.
The Monetary Policy Committee kept its repo rate unchanged at 4% which means the rate at which banks borrow money from RBI remains as is. Normally, when RBI reduces the repo rate, commercial banks also have to reduce the interest rate and therefore they offer fewer interest rates on loans given to you.
Interest rates have congruence with rising inflation.
Repo Rate:
Repo rate is the rate at which commercial banks borrow money from the apex bank (RBI) by selling their securities to the central bank of our country. RBI uses it as the main tool to keep inflation under control.
Reverse Repo Rate:
Reverse Repo Rate is the rate at which RBI borrows money from other commercial banks. It is a mechanism to absorb the liquidity in the market, whenever there is excess liquidity in the market.
Marginal Standing Facility
MSF is the rate at which banks borrow overnight funds from the RBI. MSF has been created only in case of emergency when interbank liquidity goes down and overnight interest rates are volatile. Here, the rate is higher than the repo rate.
Bank Rate
The bank rate is the rate at which banks lend money to commercial banks that too without any security.
MPC’s Outlook on Growth and Inflation
Inflation:
In December 2020, for the first time in 1 year, the inflation rate had fallen below the RBI mandate band of 2-6%. It is expected that the vegetable prices will remain soft in the near term, while the pressure may continue to persist in many food items, said the MPC.
While the MPC’s outlook on food prices remains favorable, its outlook on core inflation causes depression.
Core inflation excludes unstable factors such as fuel and petrol prices.
Fuel Prices:
The RBI acknowledged the rise in fuel prices. The further increase of fuel price added with huge indirect taxes on the product by both centre and state always remain a cause of concern. This depicts the concerted policy action by both governments to control cost-push pressures.
Considering all the above factors, RBI expects inflation at 5.2% for January to March of the current fiscal year, 5.2-5% between April to September 2021and 4.3% for the third quarter of the next financial year.
Real GDP is a measure of a country’s gross domestic product which has been adjusted for inflation.
The RBI has numerous measures to extend the scope of financial markets. RBI plans to provide retail investors online access to the government financial securities, including primary and secondary directly through Reserve Bank (‘Retail Direct’).
The Company is engaged in the business of manufacturing and marketing a range of agrochemicals. It has a pan-India presence, with integrated operations across research and development, manufacturing, marketing and distribution of a wide range of crop protection chemicals, public health and Animal Health solutions.
The company manufactures technical products (active ingredients), intermediate products and formulations. Company’s products viz Deltamethrin and Alphacypermethrin are now recommended and included in the WHO/FAO specifications. The company has a well-balanced effluent treatment system for the solid, liquid and gaseous effluents and emission generated from the various processes.
Heranba's major focus is on exports. It exports its products to more than 60 countries including Argentina, Belgium, Egypt, Ghana, Indonesia, Jordan, Malaysia, Nicaragua, Philippines, South Africa, Tunisia, Ukraine, Australia, Brazil, Europe, Hamburg, Iran, Kenya, Mexico, Nigeria, Poland, Turkey, Vietnam, Bangkok, China, France, Zimbabwe, Israel, Korea, Pakistan, Saudi Arabia, Taiwan, Uganda, Thailand, UK, Bangladesh, Colombia, Germany, Hongkong, Istanbul, Kyrgyzstan, New Zealand, Peru, Singapore, Middle East. Domestically it caters to the customers all over India with its extensive dealership, stockist network and skilled field sales force.
The company has divided its product portfolio into the following segments:
Risks Relating to Industry
IPO Details:
IPO DateFeb 23, 2021 to Feb 25, 2021Issue TypeBook Built Issue IPOIssue SizeEquity Shares of Rs.10 totaling up to Rs. 625.24 CroreFresh IssueEquity Shares of Rs.10 totaling up to Rs. 60 croreOffer for Sale90,15,000 Equity Shares of Rs.10 totalling up to Rs 565.24Face ValueRs.10 per equity shareIPO PricePer Equity Share: Rs. 626-627Min Order Quantity23Listing AtBSE, NSE
Financial Performance:
Financial Performance (in INR crore) FY2018FY2019FY2020H1 FY2021Revenue750.41011.8967.9619.2Expenses674.1889.7839.1529.1Net income47.075.697.466.3Net margin (%)6.37.510.110.7
Tentative Time Table:
Gujarat-based Heranba Industries is one of the leading domestic producers of synthetic pyrethroids in India with 3-year CAGR Revenue growth at 9% and 3-year CAGR Net Income growth at 27%. Net income from operations has grown by 28% between FY19 to FY20.
At an upper price band of INR 627 and EPS of 25.03 for the FY20 PE ratio of the company is 25 which is little higher than average PE ratio of 22 of its peer companies however the business model of the peer is slightly different. Thus, we may consider that the IPO is reasonably priced.
The margins of the company are improving in the last three years. The Company has a consistent dividend track record with stable revenue growth. Eyeing the growth of the company as demand for pyrethroids in India and worldwide are going to remain positive during 2020-2025 we may expect the company to have a better performance in the upcoming years.
कीमती धातुओं के भाव में पिछले सप्ताह लगातार गिरावट होती रही, लगभग तीन महीनों में इसका न्यूनतम स्तर और नवंबर 2020 के बाद से इसमे सबसे गहरी मंदी वाला सप्ताह रहा है। अमेरिकी ट्रेजरी की पैदावार में लगातार होती बढ़त, सोने में निवेश की मांग कम कर रही है। अमेरिकी फ़ेडरल रिज़र्व के डॉलर प्रिंटिंग प्रेस धीरे होने के संकेत से, 10 साल की अमेरिकी ट्रेजरी की पैदावार ऊपर की ओर बढ़ रही है, और यह एक साल के शिखर के करीब है।
आर्थिक गतिविधियाँ बढ़ने से मुद्रास्फीति बढ़ने की सम्भावना है जिससे राहत पैकेज मे कमी की जा सकती है और कीमती धातुओं के भाव मे मंदी रह सकती है। डॉलर इंडेक्स में रुख तेज़ी का दिखाई पड़ता है। निवेशकों ने पिछले एक सप्ताह में अमेरिका के बेरोज़गारी दावों में अप्रत्याशित वृद्धि को पचाना जारी रखा है और कोवीड के नए मामले मे गिरावट, कीमती धातुओं के भाव मे दबाव बढ़ा रहे है।
इस बीच, गुरुवार को जारी स्विस कस्टम्स के आंकड़ों में कहा गया है कि भारत को मासिक सोने का निर्यात मई 2019 से अपने उच्चतम स्तर पर है, जबकि चीन और हांगकांग को निर्यात निचले स्तरों पर चल रहा है। पिछले सप्ताह घरेलु वायदा सोना 1400 रुपय टूट कर 46000 प्रति दस ग्राम के निचले स्तरों पर पहुंच गया है। चाँदी वायदा मे भी सप्ताह मे 1000 रुपय प्रति किलो तक की मंदी दर्ज की गई है और इसके भाव 68000 प्रति किलो के करीब रहे है।
घरेलु वायदा सोने मे कीमतें 50 दिन के साप्ताहिक औसत के नीचे आ चुकी है और 100 दिन का डेली औसत 200 दिन के डेली औसत के निचे पहुंच गई है जो सोने के भाव मे मंदी का संकेत देता है। सोने मे 47000 रुपय पर प्रतिरोध तथा 45500 पर सपोर्ट है। चाँदी मे 69500 रुपय पर प्रतिरोध और 67000 पर सपोर्ट है।
Mergers and acquisition is a common term you must have heard before. Even if you are surfing the internet, you must have heard about the news of many companies which are going through a process of mergers and acquisition. It happens when two companies decide to combine and form a stronger company. But the question is what is merger and acquisition and how does it affect the stock prices.
As there are several ways in which two companies can combine, one of the most common processes is Mergers and Acquisitions. If two companies want to combine to form a big company, there are numerous reasons behind it: increasing market share, minimizing competition, increasing geographical reach and more.
Although, there are many companies who go into the merger and acquisition process, yet they are still not recognized. This is because either these companies are not big enough to catch the fresh headlines of the news.
Today we will talk about mergers and acquisition and how does it impact stock prices:
Mergers is an act where two companies of similar sizes and structure combine to form a new company. It is important to note that mergers usually happen between the companies which are considered equal in many ways.
There are different types of mergers:
A horizontal merger refers to a business consolidation between two companies operating in the same sector and selling similar products. A horizontal merger can be done to reduce competition, make more market control and benefit from the economy from the sale.
When two companies provide different supply chain functions including product development/selling cycle for a common good service, then it is known as a vertical merger. For instance, a manufacturing company can vertically merge with a raw material provider to create a bigger company.
When two or more companies in unrelated business activities merge and create synergy to enhance value, boost performance and save cost. In simpler terms, conglomerates consist of companies that don't have much in common.
In the product extension merger, two companies operating in the same sector and having a similar target audience with the aim of creating a new company with a huge range of products.
When two companies operate in the same sector but different markets come together to form a big company with an objective of a bigger client base and the wider market.
As mergers are all about the amalgamation of two companies, Acquisitions is, however, initiated by a larger company to absorb the smaller ones. It is a process where one company purchases more than 50 per cent of another company’s shares to gain control of that company.
If a company purchases more than 50% of a target firm’s stock, then the acquirer has a full right to make decisions about the newly acquired assets without the approval of the company’s other shareholders.
The primary reason for the acquisitions of smaller companies by large companies are:
When a large company that has reached its full limit of operations, resources, logistics. Then it might start looking at young and promising companies to acquire and incorporate into its revenue stream.
In order to get benefits from new technologies, a large company acquires a young and technologically driven one to benefit from new technologies. This is a cost-efficient way to implement new technology in any organization.
When a company tries to expand its operations, it acquires a small company rather than setting up a new business. By doing so, companies can save a lot of hassle and cost associated with setting up a new business.
Every merger or acquisition marks a great impact on the stock prices of the participating companies. Here, we will highlight the effects of mergers and acquisitions:
You may notice high volatility in the stock prices of the companies who are getting involved in mergers and acquisition.
The process of merger and acquisition is quite a long term process where several things need to be taken care of before signing the merger agreement. Many traders and analysts predict the outcome of a company and assess whether the new company post-acquisition will be stronger than the previous one or not. This gives a lot of information to the investors regarding the stock market volatility.
Therefore as an investor, if you invested in the stocks of the companies that are undergoing merger and acquisition, then expect the stock prices to be volatile during the process.
Stock prices make a huge impact on the companies that are going through the process of mergers and acquisition as it depends on the wide range of factors like macroeconomic factors, market capitalization and more. Usually, when the merging companies are similar in size, profitability and achieve an advantage, experience a hike in the stock prices.
The volatility in stock prices tends to increase in its trading volume which further increases the stock market prices. Once the merger process is complete, the stock prices of the company are generally higher than the price of each underlying company.
In the case of acquisition, the stock price of the target company increases. The main reason behind this belief is that in an acquisition, the acquiring company pays a premium to acquire the target company.
Here, the investor made a belief that an acquisition takes place only when both the acquirer and acquire benefit from the deal. The acquirer agrees to make a deal if it sees potential in it and the targeted company accepts the deal if the purchased price offered is greater than its current market price.
In an acquisition, the market tends to choose favorites. In other words, investors tend to look for winners and losers in the proposed deal. Since the acquiring company is making the purchase, unless the profitability of the deal is not evident to the investors, the stock price of the acquiring company tends to get affected negatively.
This February, the Indian government announced the Union budget which is aka the annual budget for the country. Needless to say, a country’s budget comprises a lot of things that may not be applicable to retail investors.
As a responsible investor, understanding the important aspects of budget is very crucial to know the direction in which the economy is moving and expected to move and the industries/sectors that can work better in the future.
Among all the economic terms, you may frequently hear the term called a fiscal deficit. Today, we will try to understand the concept of fiscal deficit.
The fiscal deficit is termed as the total revenue and total expenditure of the government. In other words, it tells us the total borrowings needed by the government. While calculating the total revenue, borrowings are not included.
The gross fiscal deficit (GFD) is the excess of total expenditure over revenue. Also, Deficit means “shortage”.
For the Indian Government, the primary source of revenue is taxes. Revenue of a government includes corporate tax, income tax, GST, and other taxes incurred from time to time. The other sources of revenue are interest income, disinvestment receipts, dividends.
There are numerous expenditures a government has to manage such as revenue payment, interest payments and capital expenditure.
The calculation of the fiscal deficit is as follows:
Fiscal Deficit = (Revenue Expenditure - Revenue Receipts) + Capital Expenditure - (Recovery of loan + other receipts)
Most of the emerging economies around the world including India, run in a fiscal deficit as the government’s expenditure exceeds government revenue. However, sometimes the reverse is possible.
It is important to note that the fiscal deficit does not necessarily mean the country’s economically weak. If the government is spending a lot of capital towards the development of the country such as: constructing airports, highways then the fiscal deficit may be high for that country.
The consequences of the fiscal deficit of a country:
In a country like India, where the government has to take care of many aspects regarding the development of a country, there are times when the country needs to take care of more of a certain section of a society which in turn increases the expenditure. Generally, a fiscal deficit of less than 4% of the GDP is considered a healthy economy.
Whenever there is a deficit or shortfall, the topmost priority of Indian government is to arrange funds so that it can meet its expenditure. In India, the government manages its deficit by borrowing from numerous sources such as RBI, capital market, public sector banks and more.
Needless to say, this global pandemic and its impact were uncommon. Hence, in order to manage the fallout, many experts believe the Indian government needs to resolve the unexpected measures to manage the fiscal deficit too.
India’s fiscal deficit for the current year will be marked as the highest since liberalization in 1991. According to the Finance Minister Nirmala Sitaraman, the country’s fiscal deficit is settled at 9.5% in 2020-2021 and will be targeted at 6.8 in FY 2021-2022.
Earlier, the central government had determined the fiscal deficit at 3.5% for FY21 before the arrival of Covid 19 crisis. The pandemic put double pressure on the government’s balance sheet which in turn saw a decline in nominal GDP, which brought down tax revenues, and a dire need for higher spending to support the economy.
Hence, the FY21 saw a sharp overshoot of 9.5%. For FY22, the set target is 6% which is the highest since 1994.
Earnings per share is an important metric which is used to identify a company's earnings. It is calculated by dividing a company's profit by its common stock’s outstanding shares. This is considered to be a significant factor as it provides a brief insight into the company’s profitability.
In simple terms, EPS tells how much money a company makes for each share and is primarily used to measure the company's financial health. Increasing EPS reflects higher profitability and vice versa.
Here is how EPS is calculated:
EPS = Net Income - Preferred Dividends / End-of-period common shares outstanding
For instance, a company ABC Ltd has a net income of Rs 12 lakh and announces 2 lakh as preferred dividends and has 5 lakh common shares outstanding (weighted average).
Hence the EPS of the company ABC ltd as per earnings per share formula would be:
EPS = Rs (1000000 - 200000)/ 500000
= Rs 2 per share.
You may not know but the company’s balance sheet and income statement are based on EPS calculations. It is recommended to use a weighted average number of outstanding shares as the actual number of shares may vary over a period of time.
It should be noted that the dividends earned on cumulative preferred stocks and non-cumulative preferred stocks affect the EPS results differently. For example, the dividend on cumulative preferred stock for the current period is subtracted from the net income.
The EPS is considered as one of the important factors to identify a stock’s price. It is also an essential component used for calculating price to earnings P/E ratio, which measures a company’s value as a factor of its current share price relative to its EPS.
In P/E ratio, the E stands for EPS. If you divide a company’s stock price by its EPS, investors can calculate the share value in terms of how much the stock market can afford to pay for each earned Rupee.
Earnings Per Share (EPS) is a key financial metric that indicates a company's profitability on a per-share basis. It is calculated by dividing the net income of the company by the number of outstanding shares. EPS can provide valuable insights for investors and analysts regarding a company’s financial health. Here are the main types of EPS:
Basic EPS is the simplest form of EPS calculation. It is determined by dividing the net income available to common shareholders by the weighted average number of outstanding shares during a specific period.
Key Points:
Diluted EPS provides a more conservative view of a company’s earnings per share by accounting for the potential dilution that could occur if all convertible securities were exercised. This includes stock options, convertible bonds, and preferred shares.
Key Points:
Adjusted EPS is calculated by taking the basic or diluted EPS and adjusting it for one-time items, non-recurring expenses, or extraordinary gains/losses. This provides a clearer picture of ongoing profitability by eliminating noise from irregular items.
Key Points:
Earnings Per Share is an important indicator for investors and analysts, providing insights into a company's profitability and financial performance. Here are some key reasons why EPS is significant:
EPS serves as a direct measure of a company's profitability on a per-share basis. It allows investors to assess how effectively a company is generating profit relative to its outstanding shares. A higher EPS indicates a more profitable company, which can be attractive to investors.
EPS is commonly used to compare the profitability of companies within the same industry. Investors often look at the EPS of competing firms to determine which company is more financially robust. This comparison can help in making investment decisions and identifying potential investment opportunities.
EPS plays a crucial role in calculating other important financial ratios, such as the Price-to-Earnings (P/E) ratio. The P/E ratio is calculated by dividing the market price per share by the EPS. This ratio helps investors determine whether a stock is overvalued or undervalued compared to its earnings potential, assisting in making smart investment choices.
Many companies use EPS as a basis for determining dividend payouts. A company with a stable or growing EPS is often more likely to pay dividends, making it attractive for income-focused investors. EPS growth can indicate a company’s ability to return value to its shareholders through dividends and share buybacks.
Investors and analysts closely monitor EPS as it can significantly influence a company's stock price. Positive earnings reports that show an increase in EPS can lead to a rise in stock price, as they may indicate strong financial health and future growth potential. Conversely, a decline in EPS can lead to negative sentiment and a drop in stock prices.
Trends in EPS over time can provide insights into a company's growth trajectory. Consistent growth in EPS is often viewed as a sign of a company’s ability to generate profits and sustain its business model, making it a key indicator for long-term investors.
Although earnings per share are known to be a potential financial tool, investors need to understand that EPS has its share of drawbacks.
Here are the limitations of earnings per share:
Earnings Per Share is a vital financial metric that provides valuable insights into a company’s profitability and financial performance. Understanding the different types of EPS, such as basic, diluted, and adjusted EPS, is crucial for investors when evaluating a company's financial health. Additionally, EPS serves as an essential tool for comparative analysis, investment valuation, and forecasting future performance, making it a key component in the decision-making process for investors.
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